Why a Google Phone Wont Hurt the iPhone

"Clearly, this means enabling more mobile searches, but a 'Google phone'
would also likely include tighter integration with Google Voice, GPS-enabled
directions and mapping, location-based mobile advertising, Google Checkout
(currently the only accepted payment platform in the Android apps market), and
many other current and future Google services."

By making and selling its own phone, Google would also be able to obviate
the revenue sharing between Google and its carrier and OEM partners, keeping
all of the sales earned from search and the handset. Google would also have better
control over location-based advertising, audio ads delivered via Google Voice
and other new revenue streams.

Of course, there are risks along with the benefits. For one, Google has
never sold a mobile device, or hardware of any kind.

Perhaps the most prominent risk is the potential disruption Google would
create in competing with those Android partners who pledged their support to
the open-source platform. Google sat on the sidelines while they developed the
devices, integrating Google's applications at the end.
For example, while Motorola seems somewhat revived by the positive reception
to its Droid device, the company and other Android vendors would face risks
from a Google phone, making differentiation more challenging. Despite an early
lead and a strong product road map for 2010, Google's great brand could darken
Motorola's light.
"Unless GOOG hopes to have iPhone-like dominance, introducing a Google
phone may actually limit the future growth of the overall ecosystem if its
partners rebel," McKechnie said.
Apple, by virtue of its singular choke point for hardware, applications and
services, is best positioned to weather any Google phone attack, the analyst
said. He expects 37.3 million iPhones will be sold worldwide in 2010, and said
Apple could double its market share within a few years. He wrote:

"We are not too concerned about increased competition in the smartphone
market and the resulting impact on Apple as we view most of the new competing products
coming out as 'kludge' devices which assemble separate pieces (e.g. hardware
from MOT, software from GOOG, etc.) and
attempt to make the pieces fit into a puzzle."